Stock Futures

Stock Futures

A stock futures contract is a commitment to buy or sell the financial exposure equivalent to a specific amount (contract multiplier) of shares of the underlying stock at a predetermined price (contracted price) on a specified future date.

As stock futures contracts are cash settled, there is no physical delivery of shares when the contract expires.

Upon expiry, profits and losses are credited or debited to the account of the contract buyers/sellers in an amount equal to the difference between the contracted price and the final settlement price multiplied by the contract multiplier.

The final settlement price is the average of the midpoints of the best bid and offer prices for the underlying stock as quoted on The Stock Exchange of Hong Kong, taken at five-minute intervals during the last trading day.

To offset an open short stock futures position before expiry, a seller of a stock futures contract simply buys back the contract while a buyer sells a stock futures contract to close the open long position.

All buyers and sellers of stock futures are required to post margin when opening a position in the market to ensure performance of the contractual obligations. If the margin falls below the stipulated level due to adverse price movements, the investor will be called upon to promptly restore the margin back to the original level.

Advantages

Low transaction costs
As stock futures contracts are based on the value of several thousand shares, the stock transaction costs are low relative to purchasing or selling the total underlying shares.

Ease of short selling
A short position in a stock futures contract can be easily established, allowing investors to benefit from an anticipated fall in the value of the underlying stock.

Leverage effect
As the margin required to carry a stock futures position is only a fraction of the value of the underlying stock, hedging/trading activities can be conducted with a smaller capital outlay.

Lower currency exposure for offshore investors
For global investors with an exposure in Hong Kong through stock futures contract, only the margin to carry the position is subjected to home currency price fluctuations.

Market making system
To ensure adequate market liquidity, registered traders (market makers) make firm bid/offer prices within a maximum spread limit. Price quotations by market makers, together with the participation of other traders, provide an active and liquid market for investors to open and/or close their stock futures positions.

Electronic trading
As stock futures are traded on the HKFE's Automated Trading System (ATS), where orders are electronically matched based on price and time priority and bid, offer and transaction prices are instantly disseminated, providing the highest level of price and market transparency.

Clearing House guarantee
As with all futures and options contracts traded on the HKFE, stock futures are registered, cleared and guaranteed by the HKFE Clearing Corporation (HKCC), a wholly-owned subsidiary of the HKFE. HKCC acts as the counter-party to all open contracts which effectively eliminates counter-party risks between its HKCC Participants. The HKCC guarantee does not cover an HKCC Participant's obligations to its clients. Investors should exercise due care and diligence when deciding through whom they will conduct business.

Spot Month, the next two calendar months, & next two calendar quarter months

Trading Hours

9:30 am - 12:00 noon & 1:00 pm - 4:00 pm

Last Trading Day

The Business Day immediately preceding the last Business Day of the Contract Month

Final Settlement Day

The first business day after the Last Trading Day

Final Settlement Price

The average of readings of (i) the midpoints of the best bid and best ask prices for the underlying common share taken at five-minute intervals from five minutes after the start of, and up to five minutes before the end of, the Continuous Trading Session of SEHK and (ii) the closing price of the underlying common share as quoted by SEHK on the Last Trading Day.

*Relevant information regarding contract multiplier of individual stock futures can be found in the list of stock futures

List of Stock Futures

The following list of stock futures contracts are available for trading on the HKATS. Exchange Participants and their clients should be aware that stock futures contracts may or may not have market makers to provide bid / offer quotes for trading. Investors should exercise due caution and understand the liquidity risk involved when trading stock futures without market makers.

a) Stock Futures with Contract Size More Than One Underlying Board Lot Shares

Disclaimer :
Hong Kong Exchanges and Clearing Ltd endeavors to ensure the accuracy and reliability of the information provided, but does not guarantee its accuracy and reliability and accepts no liability (whether in tort or contract or otherwise) for any loss or damage arising from any inaccurancies or omissions.

List of Market Makers/Liquidity Providers

Stock Futures

Providing Continuous Quotes

Market Maker

Underlying Stocks

IBG

MPF

OPT

1

Agricultural Bank of China Ltd.

2

Alibaba Pictures Group Ltd.

3

Aluminum Corporation of China Ltd.

4

AviChina Industry & Technology Co. Ltd.

5

Bank of China Ltd.

*

6

Bank of Communications Co. Ltd.

*

7

Bank of East Asia, Ltd., The

8

BOC Hong Kong (Holdings) Ltd.

9

Cathay Pacific Airways Ltd.

10

CK Hutchison Holdings Ltd.

11

CGN Power Co. Ltd.

12

China AMC CSI 300 Index ETF

13

China Cinda Asset Management Co. Ltd.

14

China CITIC Bank Corporation Ltd.

15

China Coal Energy Co. Ltd.

16

China Communications Construction Co. Ltd.

17

China Construction Bank Corporation

*

18

China Hongqiao Group Ltd.

19

China Huishan Dairy Holdings Co. Ltd.

20

China Life Insurance Co. Ltd.

21

China Merchants Bank Co. Ltd.

22

China Minsheng Banking Corp., Ltd.

23

China MobileLtd.

24

China Oilfield Services Ltd.

25

China Petroleum & Chemical Corporation

*

26

China Shenhua Energy Co. Ltd.

27

China South City Holdings Ltd.

28

China Southern Airlines Co. Ltd.

29

China Telecom Corporation Ltd

*

30

China Unicom (Hong Kong) Ltd.

31

CITIC Ltd.

32

CITIC Securities Co. Ltd.

33

CLP Holdings Ltd.

34

CNOOC Ltd.

35

CRRC Corporation Ltd.

36

CSOP FTSE China A50 ETF

*

*

37

Digital China Holdings Ltd.

38

Esprit Holdings Ltd.

39

Evergrande Real Estate Group Ltd.

40

Foxconn International Holdings Ltd.

41

Fosun International Ltd

42

GOME Electrical Appliances Holding Ltd.

43

Great Wall Motor Co. Ltd.

44

Guangzhou Automobile Group Co., Ltd.

45

Guangzhou Baiyunshan Pharmaceutical Holdings Co. Ltd.

46

Haitong Securities Co. Ltd.

47

Hang Seng Bank Ltd.

48

Henderson Land Development Co. Ltd.

49

Hong Kong and China Gas Co. Ltd., The

*

50

Power Assets Holdings Ltd.

51

Hong Kong Exchanges & Clearing Ltd.

52

HSBC Holdings Plc.

53

Huaneng Power International, Inc.

54

Huatai Securities Co., Ltd.

55

Industrial & Commercial Bank of China Ltd.

*

56

iShares FTSE A50 China Index ETF

*

57

Kingsoft Corporation Ltd.

58

Li & Fung Ltd.

59

MTR Corporation Ltd.

*

60

New China Life Insurance Co. Ltd.

61

New World Development Co. Ltd.

62

PetroChina Co. Ltd.

*

63

PICC Property and Casualty Co. Ltd.

64

Ping An Insurance (Group) Co. of China Ltd.

65

Poly Property Group Co. Ltd.

66

Semiconductor Manufacturing International Corporation

67

SOHO China Ltd.

68

Sun Hung Kai Properties Ltd.

69

Sunac China Holdings Ltd.

70

Swire Pacific Ltd. 'A'

71

Tencent Holdings Ltd.

72

Wharf (Holdings) Ltd., The

73

Yanzhou Coal Mining Co. Ltd.

74

Zijin Mining Group Co., Ltd.

*

refers to a Futures Exchange Participant acting as a Market Maker or Liquidity Provider in Futures Exchange Products or a Stock Options Exchange Participant acting as a Market Maker for Stock Options

Market Making/Liquidity providing obligations and Incentives

Stock Futures

Market Making Obligation

Provision of
Continuous Quotes (CQ)

Response to
Quote Requests (QR)

Assigned Contract

At least the first 2 contract months
[i.e. Spot Month and the next calendar month]

All contract months

Trading Requirement

Provision of CQ for not less than 70% of the trading hours in each calendar month

Response to not less than 70% of the QR in each calendar month

Maximum Time Limit for Responding to QR

N/A

Response to a QR within 10 seconds

Minimum Display Time

Not less than20 seconds, unless a change in the nominal price of the underlying stock occurs during that period, in which case, the MM may change its Quote provided

Maximum Bid/Offer Spread

4 times the best bid / offer spread of the underlying stock or HK$0.15, whichever is greater